The St. Lucia Blood Bank, a private charity partly supported by government grant
ID: 2589119 • Letter: T
Question
The St. Lucia Blood Bank, a private charity partly supported by government grants, is located on the Caribbean island of St. Lucia. The blood bank has just finished its operations for September, which was a particularly busy month due to a powerful hurricane that hit neighboring islands causing many injuries. The hurricane largely bypassed St. Lucia, but residents of St. Lucia willingly donated their blood to help people on other islands. As a consequence, the blood bank collected and processed over 20% more blood than had been originally planned for the month. A report prepared by a government official comparing actual costs to budgeted costs for the blood bank appears below. Continued support from the government depends on the blood bank's ability to demonstrate control over its costs St. Lucia Blood Bank Cost Control Report For the Month Ended September 30 Actual Results Planning Budget Variances Liters of blood collected Medical supplies Lab tests Equipment depreciation Rent Utilities Administration 680 500 $ 7,927 $5,775 $ 2,152 U 9,405 2,060 1,600 368 14,390 7,225 1,800 1,600 340 14,250 2,180 U 260 U 0 28 U 140 U Total expense $ 35,750 $ 30,990 $ 4,760 U The managing director of the blood bank was very unhappy with this report, claiming that his costs were higher than expected due to the emergency on the neighboring islands. He also pointed out that the additional costs had been fully covered by payments from grateful recipients on the other islands. The government official who prepared the report countered that all of the figures had been submitted by the blood bank to the government, he was just pointing out that actual costs were a lot higher than promised in the budget. The following cost formulas were used to construct the planning budget:Explanation / Answer
Answer:
ST. Luica Blood Bank
Flexible Budget Performance Report
For the Month Ended September 30
Actual
result
Spending
variance
Flexible
budget
Activity
variance
Planing
budget
Liters of blood collected (q)
680
0
680
500
Medical supplies ($11.55q)
7927
73
U
7854
2079
U
5775
Lab tests ($14.45q)
9405
421
F
9826
2601
U
7225
Equipment depreciation ($1,800)
2060
260
U
1800
0
1800
Rent ($1,600)
1600
0
1600
0
1600
Utilities ($340)
368
28
U
340
0
340
Administration ($13,400 + $1.70q)
14390
166
F
14556
306
U
14250
Total expense
35750
226
F
35976
4986
U
30990
ST. Luica Blood Bank
Flexible Budget Performance Report
For the Month Ended September 30
Actual
result
Spending
variance
Flexible
budget
Activity
variance
Planing
budget
Liters of blood collected (q)
680
0
680
500
Medical supplies ($11.55q)
7927
73
U
7854
2079
U
5775
Lab tests ($14.45q)
9405
421
F
9826
2601
U
7225
Equipment depreciation ($1,800)
2060
260
U
1800
0
1800
Rent ($1,600)
1600
0
1600
0
1600
Utilities ($340)
368
28
U
340
0
340
Administration ($13,400 + $1.70q)
14390
166
F
14556
306
U
14250
Total expense
35750
226
F
35976
4986
U
30990
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